Salmat (SLM)

Salmat
reported its full-year result in line with expectations earlier this week, with net profit down 27 per cent on the previous year. A tough earnings outlook saw the share price fall to its lowest level since February 2009. The direct marketing company is facing declining print volumes, a tough retail advertising market and is managing a transition from traditional media to digital media. The company also lost in March its largest call centre contract with Telstra. Shares have fallen 11 per cent in August alone, as investors expect trading conditions to remain challenging over the next 12 months. While management did not provide guidance for fiscal 2012, preferring again to provide an update at the AGM in November, brokers expect growth to be driven from the digital businesses. The new head of digital, Nick Spooner, will be looking to offset the structural decline in the company’s traditional businesses, including the business process outsourcing and catalogues divisions. Deutsche Bank says current valuation levels are “undemanding" but fails to see a positive catalyst for the stock in the near term.